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Looking for an innovative way to rev up employeemotivation--and show them you appreciate the work they do?Take a tip from Doug Sears, who thought a good way to keep hisemployees' wheels spinning would be to offer a real set ofwheels as an incentive. But instead of choosing a deservingemployee himself, the owner of executive search firm DS&A andsoftware development company RecruitMAX Software in Orange Park,Florida, let his 50 employees choose who would win the use of a1997 Ford Mustang GT convertible for a year.
From June to December last year, employees were encouraged torecognize positive performance by co-workers with "DreamDollars"--forms that looked like dollar bills. Employees notedthe recipient's name, their own name and the reason for theaward on the bill. Reasons ranged from handling a difficultsituation successfully to simply brightening someone's day witha pleasant attitude. At the end of the contest period, the dollarswere tallied, and the employee with the highest number was handedthe keys to the car at the companies' holiday party inDecember.
The one-year lease on the car, plus gas and insurance, will costthe companies $10,000 to $12,000--an investment Sears believes iswell worth it. During the contest period, the companies posted a200 percent increase in sales over the same time period theprevious year--from $382,000 to $1.5 million--which easily coveredthe cost of the contest with profits left over. In addition, Searssays the contest created a stronger sense of teamwork because theemployees chose the winner.
"This contest has instilled something in each and everyemployee here," Sears says. "We are a team, and they areall first-string players."
Jacquelyn Lynn is a business writer in Winter Park,Florida.
Go Figure
Is the price really right?
Do you know the real costs of the products and services youprovide? Charles L. Norman, a CPA and senior manager specializingin entrepreneurial services with Ernst & Young LLP, says manybusiness owners don't, especially when they have a significantamount of indirect costs. One solution is activity-based costing,the process of associating costs with the activity which producedthe cost.
One way to do this is with sophisticated software. But whileprecise, this option can cost you nearly $10,000 for the program,installation and training--no small change for most entrepreneurs.A more affordable alternative, Norman says, is to keep a verydetailed chart of accounts and carefully allocate overhead costsback to the appropriate product or service. It's a techniquethat, while not 100 percent accurate, will provide a clearerpicture of the cost of your products.
The key is to attach specific costs to the product involved. Forexample, if you spend a disproportionate amount of your advertisingbudget on one particular product, you need to charge the real costof the promotion to that one product to get a realistic profitpicture. The same procedure should be applied to depreciation,equipment expenses, interest and debt costs, building occupancycosts, freight and delivery expenses, and even executivecompensation.
"Most people do a good job allocating the direct labor tothe product," Norman observes. "What they don't dowell is allocate [the cost of] management labor. For example, thepresident or chief operating officer may be spending most of his orher time on a certain product line, trying to get it off theground, and if you allocated all his or her wages to that line, itmight not be as profitable as it looked."
Norman says the process of determining where you're reallymaking your money is often an eye-opening experience. Justremember, the information will allow you to make better managementand pricing decisions, and ultimately create a more profitablecompany.
Prime Target
Keep your company from being a victim of extortion.
It's the stuff movies are made of: bomb threats, producttampering, sabotage and kidnapping. You might think these thingscould never happen to you--after all, you're a small,relatively obscure company. But that could actually be what makesyou an attractive target to an extortionist.
"Being a victim of extortion or threats is not a factor ofsize, and it's not always connected to a perception of wealth.You can fall victim for many reasons," says Andy Duffin,managing director of crisis management services for PinkertonConsulting and Investigations in Hallan- dale, Florida."A small company might be an easier target than a largemultinational one, which may often be perceived as having asignificant security force in place. And while a large companymight be able to weather the costs stemming from a kidnapping, aproduct recall or a negative press campaign, for a smaller company,the damage could be irreparable."
To protect your company from corporate terrorism, the first stepis to understand that it can, indeed, happen to you. Duffin saysthe source will likely be one of six types of perpetrators:disgruntled employees (current or former); someone else with agrudge against you or the company; criminals who are lookingprimarily for financial gain; psychotic or mentally illindividuals; terrorists; or "hoaksters." Possiblescenarios include an unhappy employee who threatens to releasecompany secrets or plant a virus in your computer, threats from aperpetrator to injure people or damage property if a ransomisn't paid, product tampering, and threats to generate negativepublicity if the company fails to take specific actions.
The next step is to develop a crisis management plan. Althoughyou certainly can't plan for all contingencies, thinkin advance about what steps you'll take so youcan react calmly and purposefully to resolve a situation.Decide who will be in charge of what, and plan for communicatingwith law enforcement officials, the media, your customers and youremployees. You might also want to meet with a crisis managementconsultant before anything happens; establishing such arelationship in advance may cost a small amount of time and money,but it will be invaluable if the need arises.
Determine, too, how you will handle the costs associated with anincident. Some of the expenses may be covered under your regularbusiness insurance, or you may want to investigate specialpolicies. For example, CIGNA Property & Casualty recentlyintroduced kidnap and extortion, and product tampering insurance toits product line. In conjunction with the insurance, CIGNA offersrisk management services through Pinkerton, which consults withclients both before an incident, to reduce the likelihood of oneoccurring, and afterward, to assist with managing thesituation.
All Locked Up
Speeding up cash flow with a lockbox.
It's a service large companies have been using for decades.Now a growing number of small businesses are letting their bankshelp them improve cash flow with a lockbox. It works like this:Your customers mail their payments to a post office box, which yourbank rents in your company's name. The bank sends a courierseveral times a day to clear out the box; checks are immediatelydeposited into your account, and you get a report outlining all thetransactions in as much detail as you want and as frequently as youwant.
Lockbox is a low-tech-sounding term for a high-tech, high-speedservice that can be easily customized for just about any business,says Roger Shields, vice president and manager of treasurymanagement at Bank One Utah in Salt Lake City. "Any companythat is spending more than a few hours a day having someone intheir office running to the post office, picking up the mail,making the deposits and keying that information back into thesystem is a good candidate for a lockbox," Shields says."It's a volume-driven process, which is why the bank cando it much more efficiently and at much less cost than you can paysomeone to do the same work in-house."
A company that averages 500 remittances a month can expect topay $75 to $100 per month for lockbox service. Reporting procedurescan range from something as simple as a faxed copy of the dailydeposits to the image of each check being placed on CD-ROM. Shieldssays lockboxes are a standard banking service; to set up a program,call your bank.
Politically Correct
Stand up and be counted.
What's the biggest challenge small-business owners face? Ifyou conducted a survey, chances are, burdensome governmentregulation would be in the top three. That's why more and morebusinesspeople are getting involved in politics--an arena that haslong been considered taboo in polite conversation but has atremendous impact on companies.
"There isn't a businessperson alive who doesn'tfeel some burden in terms of regulatory, statutory or taxationissues," says Ronn W. Cupp, vice president of governmentaffairs for the State Chamber, Oklahoma's Association ofBusiness & Industry. "If you're in business, youdon't have a choice--you have to be involved inpolitics."
But choosing your issues and staying informed can be a dauntingtask. The solution, says Cupp, is to look to the political arm ofan organization that is sympathetic to your interests. Thoseorganizations include local and state chambers of commerce, as wellas your industry's trade and professional organizations.They will let you know what's going on in electionsand legislation and will offer guidance on what you can do tohelp.
Your involvement might include making financial contributions,writing letters, attending meetings, supporting candidates duringelections and perhaps even lobbying legislators. "You canchoose your degree of participation," says Cupp. He recommendsgiving as much as you can to important issues, pointing out thatpolitical action is cyclical, generally peaking duringelection seasons and when state legislatures are in session.
The plus side of political action means you can positivelyinfluence legislation that affects your business. Is there adownside? Cupp points out it's possible you could take a publicposition on an issue that might offend some of your customers, buthe adds, "You can do that with other things, too. [The StateChamber] has taken controversial stands, and in many cases, we gainmore than we lose."
Accidents Happen
...but employees can help prevent them.
It's hard to argue with workplace safety programs--they helpkeep your insurance rates down and your productivity, profitabilityand employee morale up.
As companies work to create a safe environment, they often focuson such prevention issues as operating equipment and doing othertasks safely, and wearing appropriate safety gear. But, says TomCallanan, senior vice president of Workers Compensation Fund ofUtah in Salt Lake City, employees also need to be trained to takeaction if they see an unsafe situation, whether or not it has adirect impact on their particular job or work area.
Typical safety programs provide incentives for maintaining anaccident-free workplace. Callanan says those programs also need toinclude recognition and incentives for employees who exerciseinitiative in spotting and taking steps to correct dangeroussituations--whether it's a wobbling stack of books on a filingcabinet, a loose step or stair rail, or a major equipmentproblem.
According to Callanan, a good safety program includes thefollowing components:
- Management leadership and commitment. The company ownerand senior managers must be committed to safety for the program towork.
- Assignment of responsibility. There needs to be a personor a committee with responsibility and authority regarding safetyprocesses.
- Hazard identification and control. Systems need to be inplace to spot and correct dangerous situations before an accidentoccurs.
- Employee and supervisor training. Education must becompanywide and ongoing.
- Employee awareness. Develop programs that willcontinually create awareness of the importance of safety amongemployees at all levels.
- Medical assistance. Know what you will do if an accidentoccurs.
- Accident and incident investigation. When somethinghappens, be prepared to thoroughly research the situation tounderstand exactly what happened and why.
- Record-keeping. Keep appropriate documentation forinsurance, government reporting and incentive programs.
For assistance in developing or enhancing your safety program,Callanan suggests calling your workers' compensation insurancecarrier. "It can help you set up a program, measure theresults and make adjustments as necessary," Callanan says."It can also put you in touch with any other resources you mayneed."
Contact Sources
Bank One Utah, 80 W. Broadway, #300, Salt Lake City, UT84101, (801) 481-5125
DS&A RecruitMAX Software, 320 Corporate Wy., #100,Orange Park, FL 32073, (904) 278-9998
Ernst & Young LLP, 1 SeaGate, Toledo, OH 43604, (419)321-5470
Pinkerton Consulting and Investigations, 1250 E.Hallandale Beach Blvd., #404, Hallandale, FL 33009, (954)458-2707
State Chamber, Oklahoma's Association of Business &Industry, 330 N.E. 10th St., Oklahoma City, OK 73104, (405)235-3669
Workers Compensation Fund of Utah, 392 E. 6400 South,Salt Lake City, UT 84107, http://www.wcf-utah.com
